How to Start a Contracting Business in the UAE

How to Start a Contracting Business in the UAE

The United Arab Emirates (UAE) is one of the fastest-growing economies in the world and has a wide range of focuses on infrastructure and urban development. Along with the residential mega-projects, commercial towers, and transportation systems, the UAE is always developing and constructing. However, it has increased the steady growth and provides a wide spectrum of opportunities for investors and entrepreneurs in the construction domain.

Opening a contracting business in the UAE is one of the most profitable ideas. No matter if it is civil, electrical, or mechanical contracting, there is always a supply and demand for contractors. You can open a successful contracting company by planning properly, completing all the legal aspects, and getting help from a seasoned consulting company such as Flyingcolour Business Setup. The construction and contracting business is booming in this region, and it is a wise opportunity to grab this advantage.

What is a Contracting Business?

A contracting business provides services associated with construction. Services can range from constructing homes, offices, and commercial spaces to contracting of electrical wiring, plumbing, and interior fit-outs. Contractors usually complete small- to large-scale projects for private clients or government entities.

There are many forms of contracting companies in the UAE, depending on their structure, scope, earned income, deducted expenses, and other assessments, for example:

• General contracting
• Civil contracting
• Electrical and mechanical works
• Interior design and fit-out contracting
• Infrastructure and roadworks

The activity of your business depends on the type of license you require.

Why Start a Contracting Business in the UAE?

Relative to other types of businesses, it provides a higher profit margin than the jobbing business because profits are not tied to labor fees or other service company costs.

There are a lot of reasons to start a contracting business, such as:

1.  High demand in the UAE for construction services and related industries, with high levels of continuous building and infrastructure development.
2.  The UAE allows you 100% foreign ownership in many sectors, especially after recent reforms were made in several legal sectors.
3.  The benefits of tax-free status in the UAE make it more profitable to run a business in the UAE.
4.  The UAE provides quick access to set up a business and supplies government support for foreign investors.
5.  You will have access to large local and international projects, especially in Dubai, Abu Dhabi, and Sharjah.

Process to Start a Contracting Business in UAE

There are several different steps involved in setting up acontracting business in the UAE. Let's discuss the steps in detail:

1. Decide on Your Business Activity

Firstly, you will need to decide what kind of contracting activity you wish to carry out. This could include:

• Building contracting
• Electrical works contracting
• Plumbing contracting
• Interior design contracting
• Road and infrastructure contracting

2. Choose Your Jurisdiction

You will also need to decide if you want to set your business up on the mainland or in a free zone.

1. Mainland company—This allows you to take on projects across the UAE (incl. government contracts)

2. Free zone company —You get more benefits, such as 100% ownership and lower constant costs to run the business. Your operations can be limited to the free zone unless you have a local distributor involved to work outside of the free zone limits.

In the contracting business, most owners prefer a mainland UAE company because it offers them more options and access to many potential projects.

3. Choose A Legal Structure

The next decision is to select the form of your company. Common and popular forms include:

1. Limited Liability Company (LLC)—Perfect for most contracting companies.

2. Sole Proprietorship—This structure is only appropriate for individual professionals who do not perform major operations.

3. Branch of a Foreign Company—International firms that are expanding into the UAE may select this option.

Most investors select LLC structures for their companies because they allow them to have limited liability and a flexible structure to operate, while also granting the ability to sponsor employees to obtain work visas.

4. Obtain Initial Approval from DED

If you are setting up on the mainland, you must apply for initial approval from the Department of Economic Development (DED) , which indicates that no objection has been raised by the Government against your proposed business. Documents required:

• A passport copy of all shareholders
• Business activity chosen
• Business name options
• UAE entry stamp or visa copy, if applicable

5. Choose and Register a Trade Name

You must choose a distinct trade name that connects with your business activity while meeting certain requirements in the UAE. The trade name must meet the following criteria:

• Must not include any religious or vulgar words
• Must relate to your services.
• It must not copy another company's trade name.
• The trade name will be reserved for you once approved.

6. Office Lease

To get your contracting licenses, you will need to have a physical office address. You will be required to have an Ejari (tenancy contract) in place to begin the process of getting a license. You can choose an office according to the size of your operations, whether it is a shared space or a dedicated office space, depending on your budget and the size of your staff.

7. License Application

Next, apply for the contracting business license with the appropriate authority:

• DED (Department of Economic Development) for the mainland
• Free zone authority for free zone companies
• You will be required to:
• Submit your documents
• Pay the licensing fees

If you are civil, electrical, or mechanical contracting, you have to get some extra approvals from Dubai Municipality, Civil Defense, or RTA.

8. Appoint a Technical Manager

You must appoint a Technical Manager who qualifies. This is required for contracting licenses. Requirements for a Technical Manager:
 

• Bachelor's degree in civil, electrical, or mechanical engineering
• Valid residence visa in the UAE
• Experience certificates

The technical manager will be registered with Dubai Municipality and act as the supervisor of project execution. The manager will be responsible for ensuring that work meets the requisite standards and rules laid out in their license.

9. Complete Licensing and Obtain External Approvals

When all the documents have been approved and you have registered the technical manager, you will be issued your trade license. Depending on your business activity, you may also need external approvals from:
 

• Dubai Municipality
• Civil Defence
• Environment Department
• Roads and Transport Authority (RTA)

Flyingcolour Business Setup can identify and help you apply for the requisite approvals.

10. Open a Business Bank Account and Apply for Visas

After you have been issued your license:

• Open a business bank account in the UAE
• Apply for residency visas for your shareholders and employees
• Employ skilled labor, engineers, and site supervising personnel by your business needs

Flyingcolour Business Setup will also be able to facilitate visa processing and PRO services.

Costs to Start a Contracting Company in UAE

The costs to set up a contracting company in the UAEwill depend on several elements:

• The type of contracting license
• The jurisdiction (mainland or free zone)
• Rent
• Number of visas
• Appointment of a technical manager

On average, the setup cost starts from AED 25,000*, and the cost also depends on your specific requirements. Flyingcolour Business Setup can provide you an estimate of personalized and transparent prices based on your business plan.

Advantages of Starting a Contracting Business in UAE

• Access to high-value infrastructure projects
• 100% foreign ownership in many sectors
• Low personal income taxes and corporate taxes
• Access to ports and airports for global reach
• Easy and fast business setup with professional support

How Can Flyingcolour Business Setup Help You in Setting Up a Contracting Business in UAE?

Flyingcolour Business Setup is a specialist business formation consultancy with over 20 years' experience in the UAE. We help entrepreneurs and investors to set up companies in most industries, including construction and contracting.

We offer the following services:

1. Complimentary business consultation
2. Trade license application support
3. Office space solutions and Ejari support
4. Technical Manager, Municipality Approvals
5. PRO services and visa processing
6. Opening a corporate bank account

Firstly, Flyingcolour Business Setup makes sure that every step of the contracting business setup in the UAE is easy, smooth, and fully compliant.

FAQs—Contracting Business Setup in UAE

Q1: Can a foreign investor start a contracting Business in the UAE?

Yes. In many cases, foreign investors can fully own contracting companies, especially in the UAE mainland. Some activities may have a local service agent requirement, depending on the license.

Q2: What are the differences between a free zone and a mainland contracting company?

A mainland company can work anywhere in the UAE, as well as get government contracts. A free zone company has advantages in terms of costs but can only work inside the free zone or through a local agent.

Q3: Is a technical manager needed for contracting licenses?

Yes, a qualified technical manager is a requirement for all construction licensing companies. The managers should be pre-approved by the Dubai Municipality.

Q4: When can I expect to start up a contracting business in the UAE?

Generally, you can expect to start trading between 7 and 14 working days, depending on approvals, paperwork, and office setup.

Therefore, to learn more about how to start a contracting business in the UAE, Book a free consultation with one of the Flyingcolour Business Setup team advisors.

The article was published on 11/07/2025. It is important to note that the federal policies and updates mentioned may have changed since then. For the most current information, please contact our consultant!